OFG BANCORP — Regulatory Filings 2021

Jun 29, 2021

11-K 1 ofg11k20201231.htm FORM 11-K EDGAR HTML document created by Certent CDM HD version: 20.10.1 ofg11k20201231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____

FORM 11-K

_______

FOR ANNUAL REPORTS OF EMPLOYEE

STOCK REPURCHASE SAVINGS AND

SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One):………………………………………………………………………………………………………..

☒ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934.

For the fiscal year ended December 31, 2020

OR

☐TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934.

For the transition period from _ to _

Commission file number 001-12647

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

THE ORIENTAL BANK CODA PROFIT SHARING PLAN c/o Oriental Bank 254 Muñoz Rivera Avenue, Oriental Center 15thFloor San Juan, Puerto Rico 00918

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

OFG BANCORP 254 Muñoz Rivera Avenue, Oriental Center 15thFloor San Juan, Puerto Rico 00918

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

TABLE OF CONTENTS

Page

Report of Independent Registered Public Accounting Firm1

Financial Statements:

Statements of Net Assets Available for Benefits as of December 31, 2020 and 20193

Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 20204

Notes to Financial Statements5 – 12

Supplemental Schedule:

Schedule I – Schedule H, Line 4i - Schedule of Assets (Held at Year End) as of December 31, 202013

Exhibits14

Signatures15

Report of Independent Registered Public Accounting Firm

To the Plan Participants and Plan Administrator The Oriental Bank CODA Profit Sharing Plan:

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of The Oriental Bank CODA Profit Sharing Plan (the Plan) as of December 31, 2020 and 2019, the related statement of changes in net assets available for benefits for the year ended December 31, 2020, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2020 and 2019, and the changes in net assets available for benefits for the year ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Accompanying Supplemental Information

The Schedule H, Line 4i – Schedule of Assets (Held at Year End) as of December 31, 2020 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ KPMG LLP

We have served as the Plan’s auditor since 2005

San Juan, Puerto Rico June 29, 2021

Stamp No. E434345 of the Puerto Rico Society of Certified Public Accountants was affixed to the record copy of this report.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN Statements of Net Assets Available for Benefits as of December 31, 2020 and 2019

20202019| Investments at fair value: | | | | | |
| --- | --- | --- | --- | --- | --- |
| Cash and money market instruments | $ | 9,837 | $ | 222,863 | |
| Common stock | | 5,684,027 | | 6,189,993 | |
| Insurance company investment contracts | | | | | |
| (pooled separate accounts) | 101,669,357 | | | 45,586,165 | |
| | 107,363,221 | | | 51,999,021 | |
| Fully benefit-responsive investment contract | | | | | |
| (stable value fund), at contract value | | 9,735,927 | | 6,565,321 | |
| Total investments | 117,099,148 | | | 58,564,342 | |
| Receivables: | | | | | |
| Participant's contributions | | 172,629 | | | - |
| Employer's contributions | | 71,871 | | | - |
| Account receivable from plan sponsor | | - | | 567,528 | |
| Dividends | | 21,461 | | 18,353 | |
| Notes receivable from participants | | 1,208,374 | | 7,227 | |
| Total receivables | | 1,474,335 | | 593,108 | |
| Other assets | | 2 | | 176,535 | |
| Total assets | $118,573,485 | | $ | 59,333,985 | |

Liabilities:
Other liabilities	$	141,632	$	56,812
Total liabilities		141,632		56,812
Net assets available for benefits	$118,431,853		$	59,277,173

See accompanying notes to financial statements.

3

THE ORIENTAL BANK CODA PROFIT SHARING PLAN Statement of Changes in Net Assets Available for Benefits Year ended December 31, 2020

2020

Additions to net assets attributed to: Net appreciation in fair value of investments$8,151,162 Dividends81,924 Interest and other674,594 Contributions:
Participants3,776,910 Employer1,501,931 Total additions14,186,521 Deductions from assets attributed to:
Benefits paid to participants(4,232,245)
Administrative fees(374,154)
Total deductions(4,606,399)
Net increase9,580,122 Plan assets transferred in from the Retirement Plan of Scotiabank de Puerto Rico (Note 1)49,574,558

Net assets available for benefits: Beginning of year59,277,173 End of year$118,431,853

See accompanying notes to financial statements.

4

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020

(1)Description of the Plan

The following description of The Oriental Bank CODA Profit Sharing Plan (the “Plan”) provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.

a)General

The Plan was organized on January 1, 1992 as a defined contribution plan originally maintained by Oriental Bank (the “Employer”), a wholly owned subsidiary of OFG Bancorp (the “Company”), for the benefit of the Employer’s and its affiliated companies’ employees who are residents of Puerto Rico and are age 21 or older. The Plan is intended to be a qualified plan pursuant to the Puerto Rico Internal Revenue Code of 2011, as amended (the “PR Code”). In 2016, the Plan was amended or restated to meet the requirements of Sections 401(a) and (k) of the U.S. Internal Revenue Code of 1986, as amended (the “US Code”). In 2018, the Puerto Rico Treasury Department (the “PR Treasury”) reaffirmed the Plan’s qualification under the PR Code. It contains a cash or deferred arrangement qualifying under the PR Code and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). As such, the Plan must comply with reporting and disclosure requirements, participation and vesting standards, and fiduciary standards and duties, among other requirements. The U.S. Department of Labor (DOL) has full authority to regulate and investigate the Plan. The DOL reviewed the Plan, as it was selected under the DOL’s ordinary investigation procedures. On December 18, 2019, the Employer received a findings letter from the DOL outlining certain potential violations of the Prohibited Transaction Rules of ERISA. The Employer resolved this matter in 2020. The DOL issued a closing letter in this matter on March 10,2021, as it reviewed the corrective actions taken by the Employer. For more information related thereto, please refer to Note 9.

On December 31, 2019, the Employer purchased from The Bank of Nova Scotia all the outstanding common stock of Scotiabank de Puerto Rico (“SBPR”). Immediately following the closing of the SBPR Acquisition, the Employer merged SBPR with and into the Employer, with the Employer continuing as the surviving entity. In December 2020, the balances of the Retirement Plan of SBPR employee accounts were transferred to the Plan.

b)Contributions

Each year, participants may contribute up to the maximum deferral amount under the provisions of Section 402(g) of the US Code as annually indexed by the U.S. Internal Revenue Service (the “IRS”). For the periods ended December 31, 2020 and 2019, the limits for both periods were $19,500 and $19,000, respectively. If, in addition to a deferral election under the Plan, participants contribute to an individual retirement account (“IRA”) in Puerto Rico, pre-tax contributions to both the Plan and the Puerto Rico IRA in the aggregate cannot exceed the sum of the annual deferral limit under the PR Code ($19,500 and $19,000 for the tax years ended December 31, 2020 and 2019, respectively). Participants may also contribute amounts representing distributions from other Puerto Rico and U.S. qualified defined benefit or contribution plans.

Participants direct the investment of their contributions into various investment options offered by the Plan.
The Plan currently offers pooled separate accounts, a stable value fund, and shares of common stock of the Company as investment options for participants. Participants direct the investment of their matching contributions in the Plan. The Employer provides a discretionary matching contribution of 50% of each participant’s contributions up to a maximum contribution for matching purposes of 8% of the participant’s compensation per year.

c)Participant Accounts

Each participant’s account is credited with the participant’s contribution and allocations of the Employer’s contribution and Plan earnings and charged with an allocation of administrative fees. Allocations are based

5

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020

on participant earnings or account balances, as defined. The benefit to which a participant is entitled to is the benefit that can be provided from the participant’s vested account.

d)Vesting

Participants are immediately vested in their contributions plus actual earnings thereon. The Employer’s contribution portion of their accounts plus actual earnings thereon vest upon the occurrence of any of the following events: completion of three years of credited service; attaining age 65; total disability while employed by the Employer; or death while employed by the Employer.

e)Payment of Benefits

On termination of service due to death, disability, or retirement, a participant or its heirs may elect to receive the value of the vested interest in his or her account in either a lump sum amount, a fixed period that may not exceed the participant’s life expectancy or through a fixed annuity contract. For termination of service for other reasons, a participant may receive the value of the vested interest in his or her account as a lump sum distribution.

f)Loans to Participants

The Plan does not allow for loans to participants. In December 2020, the balances of the Retirement Plan of SBPR employee accounts were transferred to the Plan including its existing participant loans amounting to $1.2 million. These loans will be extinguished as they are repaid by participants. Loan terms range from 1-5 years or up to 30 years for a home loan. The loans are secured by the balance in the participant’s account and bear interest at a rate commensurate with the interest rate charged by persons in the business of lending money for loans which would be made under similar circumstances. Principal and interest are paid ratably through payroll deductions. No additional loans will be granted to participants.

g)Forfeited Accounts

Employer contributions that are not vested upon termination of employment are forfeited and may be used to pay administrative expenses and then reduce future contributions to the Plan by the Employer. For the year ended December 31, 2020, forfeitures totaling approximately $11,000 were used to offset Employer contributions. At December 31, 2020, the Plan had approximately $2,900 in forfeitures available to pay administrative expenses and reduce future Employer contributions.

h)Plan Termination

Although it has not expressed any intent to do so, the Employer has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to ERISA provisions. In the event of Plan termination, participants will become 100% vested in their Employer’s contributions.

6

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020

(2)Summary of Significant Accounting Policies

Following are the significant accounting policies followed by the Plan:

a)Basis of Presentation

The accompanying financial statements have been prepared under the accrual method of accounting.

b)Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. A material estimate that is particularly susceptible to significant change in the near term is the valuation of investments.

c)Risks and Uncertainties

The Plan invests in various financial instruments. Investment securities are exposed to various risks, such as interest rate, credit, and market risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the fair values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

d)Investments Valuation and Income Recognition

Plan investments, other than fully benefit –responsive investment contracts (FBRICs), are stated at fair value. See Note 3 for discussion of fair value measurements.

FBRICs are reported at contract value, which is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan invests in FBRICs through the Stable Value Fund.

Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the declaration date, taking into consideration the ex-dividend date. Net appreciation/ depreciation includes the Plan’s gains and losses on investments purchased and sold as well as held during the year.

e)Payments of Benefits

Benefits are recorded when paid.

f)Plan Expenses

Under the Plan’s contract entered into with Transamerica Retirement Solutions Corporation (“Transamerica”), contract asset charges are assessed each month based on the actual combined balance of all separate accounts and the stable value fund. These charges are presented as administrative fees in the Plan’s statement of changes in net assets available for benefits.

Administrative expenses, including trustee, legal, auditing, and other fees, may be paid out of the invested assets unless paid by the Employer. Expenses assumed and paid by the Employer during the year ended December 31, 2020 amounted to approximately $177,000.

g)Recent Accounting Developments

Accounting standards that have been issued by the Financial Accounting Standards Board (“FASB”) or other standards-setting bodies are not expected to have a material impact on the Plan’s statements of net assets available for benefits or the related statement of changes in net assets available for benefits.

7

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020

(3)Fair Value

As discussed in Note 2, the Plan uses the fair value measurement framework under U.S. generally accepted accounting principles.

Fair Value Measurement

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are:

Level 1– assets include equity securities that are traded in an active exchange market, as well as certain money market instruments. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2– observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets.

Level 3– unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets include financial instruments whose value is determined using pricing models, for which the determination of fair value requires significant management judgment or estimation. As of December 31, 2020, and 2019, the Plan did not have such assets.

The following is a description of the valuation methodologies used for instruments measured at fair value:

Shares of the Company’s common stock: valued at quoted closing market prices (“Level 1”).

Money Market Instruments: stated at fair value, which approximates cost plus accumulated interest earnings less distributions to date (“Level 1”).

Pooled Separate Accounts: stated at readily determinable fair value. The fair value is determined by the issuer and is valued daily using publicly available quoted market prices matched with the current underlying investment holdings of the accounts (“Level 2”).

The estimated fair value is subjective in nature and involves uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could affect these fair value estimates. The fair value estimates do not take into consideration the value of future business and the value of assets and liabilities that are not financial instruments.

There were no transfers into or out of Level 1 and Level 2 fair value measurements during the years ended December 31, 2020 and 2019.

8

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020| | | | Fair Value Measurements | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Cash and money market instruments | $ | 9,837 | $ | -$ | | -$ | 9,837 |
| Common stock | 5,684,027 | | | - | | - | 5,684,027 |
| Pooled separate accounts | | | | | | | |
| Hybrid (a) | | - | 65,703,459 | | | - | 65,703,459 |
| Bond (b) | | - | 6,237,599 | | | - | 6,237,599 |
| International Equity (c) | | - | 2,212,238 | | | - | 2,212,238 |
| Equity - Large Cap (d) | | - | 19,645,424 | | | - | 19,645,424 |
| Equity - Mid Cap (e) | | - | 5,032,921 | | | - | 5,032,921 |
| Equity - Small Cap (f) | | - | 2,837,716 | | | - | 2,837,716 |
| | $5,693,864 | | $101,669,357 | $ | | -$107,363,221 | |

			Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Cash and money market instruments	$222,863	$		-$		-$	222,863
Common stock	6,189,993			-		-	6,189,993
Pooled separate accounts
Hybrid (a)		-	20,526,364			-	20,526,364
Bond (b)		-	5,039,106			-	5,039,106
International Equity (c)		-	1,928,406			-	1,928,406
Equity - Large Cap (d)		-	13,251,803			-	13,251,803
Equity - Mid Cap (e)		-	2,780,446			-	2,780,446
Equity - Small Cap (f)		-	2,060,040			-	2,060,040

$6,412,856$45,586,165$-$51,999,021

(a) The pooled separate accounts in this category primarily invest in U.S. and non-U.S. stocks, and fixed-income securities which may include bonds, mutual funds, cash equivalents or other money market instruments.
(b) The pooled separate accounts in this category primarily invest in bonds (at least 80% of total assets), preferred stocks, cash equivalents or other money market instruments.
(c) The pooled separate accounts in this category primarily invest at least 80% of assets in equity and debt securities of issuers from countries outside of the United States.
(d) The pooled separate accounts in this category primarily invest in equity securities of medium and large capitalization companies, and may invest in securities of non-U.S. issuers.
(e) The pooled separate accounts in this category primarily invest in domestic equity securities with growth potential, including foreign equity securities and debt securities.

9

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020

(f) The pooled separate accounts in this category primarily invest in common stocks contained in both the Small Cap 1750 Index and the Russell 2000 Value Index.

Investments can be redeemed with no advance notice on any day on which the New York Stock Exchange is open for trading.

(4)Stable Value Fund

Transamerica offers a stable value fund that the participant may elect to transfer all or part of his or her funds. The stable value fund is considered a fully benefit-responsive investment contract. Contract value is the relevant measurement attribute for that portion of the net assets available for benefits. Contract value, as reported by Transamerica, is the beginning balance plus any deposit and credited interest, less any withdrawals, charges, or expenses, a measurement that approximates fair value. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.

There are no reserves against contract value for credit risk of Transamerica or otherwise. The contract value of the investment contract at December 31, 2020 and 2019 was $9,735,927 and $6,565,321, respectively. The stable value fund invests in Guaranteed Investment Contracts (“GICs”). These investments seek to protect against any loss of principal while providing returns in excess of money market funds and one-year U.S. Treasury bills. The investment has a portfolio investment rate design in which all deposits are credited with the same interest rate, on daily basis, and with no set maturity. The effective credited interest rate is set monthly and effective on the first day of the month. Contract charges may reduce this return. The Transamerica stable value fund is not a separate account investment choice – it is an investment in Transamerica’s general account.

Certain events limit the ability of the Plan to transact at contract value with Transamerica. Such events include the following: (1) the Plan is changed so as to significantly affect Transamerica’s obligations to the contract, (2) the contract can no longer be treated as a pension plan contract, (3) the Plan is terminated, (4) failure to comply with the contract’s requirements, (5) failure to provide information, (6) the sum of the contract account values at any time equals $20,000 or less, or (7) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The plan administrator is not aware of any events, which would limit the Plan’s ability to transact at contract value with participants that are probable.

(5)Other assets

Transamerica rebates certain amounts to the Plan based on a fee concession. The rebate amount at December 31, 2020 and 2019 is equal 34 basis points per year based on the balances with Transamerica. This rebate is calculated on a monthly basis and credited to the Expense Budget Account; a suspense account used by Transamerica.

The Expense Budget Account may be used for plan expenses or allocated to participants as additional income.
During the years ended December 31, 2020 and 2019, the Plan reallocated to participants approximately $360,000 and $31,000, respectively. As of December 31, 2020 and 2019, the Expense Budget Account maintained a balance of approximately $2 and $177,000, respectively, included as other assets in the statements of net asset available for benefit.

10

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020

(6)Related-Party Transactions

Certain Plan investments are shares of the Company’s common stock. The Employer is the Plan sponsor and trustee and a wholly owned subsidiary of the Company and, therefore, qualifies as a party in interest. At December 31, 2020 and 2019, the Plan held an investment of 306,582 and 262,176 shares of the Company’s common stock, respectively. The fair value of the common stock at December 31, 2020 and 2019 was $5,684,027 and $6,189,993, respectively.

Transamerica serves as custodian and manages the pooled separate accounts and stable value fund, therefore, qualifies as party in interest. Transamerica contracted Oriental Insurance, LLC, a subsidiary of the Company, as the insurance agent. Another party in interest to the Plan is MidAtlantic, which serves as the custodian for the Plan.

The recordkeeper of the Plan is Oriental Pension Consultants, Inc. (“OPC”), a subsidiary of the Company. Fees charged by OPC for services provided were assumed by the Employer.

(7)Income Taxes

The trust that forms part of the Plan (the “Trust”) is intended to be exempt from Puerto Rico and U.S. federal incomes taxes pursuant to the PR Code and the US Code, respectively. The Plan sponsor has adopted a volume submitter plan document. The IRS has issued an opinion, dated April 22, 2016, that the form of the volume submitter document is acceptable under Section 401 of the US Code, and, therefore, the Trust is not subject to U.S.
federal income tax. The PR Treasury ruled on March 28, 2018 that the Plan constitutes a qualified plan pursuant to the provisions of Section 1081.01 of the PR Code and, therefore, the Trust is not subject to Puerto Rico income tax.
As applicable, the Plan is required to operate in accordance with the provisions of the PR Code and the US Code to maintain its qualification. Effective in 2020, the Employer, adopted an amendment for the benefit of employees eligible to participate in the Plan, which complies with the provisions of PR Treasury’s Circular Letters No. 11-10, 13-02 and 16-08, and on April 9, 2021, the Plan requested from the PR Treasury a favorable determination letter with respect to such amendment. Although the Plan has been amended, the Plan sponsor believes that the Plan is designed and is being operated within the applicable requirements of the PR Code and the US Code, therefore, remains qualified under the PR Code and the US Code.

U.S. generally accepted accounting principles require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS and the PR Treasury. As of December 31, 2020, and 2019, there are no uncertain tax positions taken or expected to be taken that would require recognition or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions. However, there are currently no audits in progress for any tax periods. The Plan is no longer subject to income tax examinations for the years prior to 2015.

(8)Excess Contributions Payable to Participants

The Plan is subject to certain non-discrimination rules under the PR Code. As of December 31, 2020 and 2019, the Plan failed certain of the non-discrimination tests under the PR Code due to lower contribution percentages by nonhighly compensated eligible employees relative to the contribution percentages of highly compensated eligible employees. In order to meet the requirements of the non-discrimination rules, the Plan refunded a portion of the contributions made by highly compensated participants, in accordance with applicable provisions of the PR Code.
The refund for 2020, paid in March 2021, totaled $141,632. The refund for 2019, paid in March 2020, totaled $56,812. These refunds are included as other liabilities in the Plan’s statement of net assets available for benefits.

(9)Non-Exempt Prohibited Transaction

From December 31, 2013 through December 31, 2018, Oriental Bank engaged in certain non-exempt prohibited transactions under ERISA in connection with Plan assets. As a result of such transactions, Oriental Bank benefited from the use of Plan assets by receiving certain commissions from a third party without offset or rebates to the Plan.

11

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019, AND YEAR ENDED DECEMBER 31, 2020

Oriental Bank remitted $567,528, including interest, to the Plan and allocated this amount to Plan participants in May 2020 as remediation for said transactions. It was recorded as an account receivable in the Plan’s statement of net assets available for benefits at December 31, 2019.

(10)Subsequent events

The Plan has evaluated subsequent events from the statement of net assets available for benefits date through June 29, 2021, the filing date of this Annual Report on Form 11-K for the year ended December 31, 2020.

12

SCHEDULE I

THE ORIENTAL BANK CODA PROFIT SHARING PLAN Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2020

(b)(c)(d)(e)| Identity of issue, | | Description of Investment, including maturity | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | borrower, | | date, rate of interest, collateral, par, | | | | | |
| (a)lessor, or similar party | | | or maturity value | | | Cost | Current value | |
| Participant directed: | | | | | | | | |
| OFG Bancorp | | OFG Bancorp: | | | | | | |
| | | Common Stock | | | 306,582 | shares | $ | 5,684,027 |
| Transamerica | | Pooled Separate Accounts: | | | | | | |
| | | Transamerica AA - Moderate | | | 1,024,998 | units | 29,671,877 | |
| | | WMC Core Equity | | | 388,963 | units | ** | 8,333,210 |
| | | AEGON Balanced | | | 48,835 | units | ** | 5,800,408 |
| | | SSgA Russell Lg Cap Grth Ind | | | 269,413 | units | 10,201,783 | |
| | | American Century Government Bond | | | 123,938 | units | ** | 2,726,319 |
| | | Franklin Small-Mid Cap Growth | | (1) | 78,187 | units | ** | 5,032,921 |
| | | SSgA International Index | | | 62,065 | units | ** | 2,212,238 |
| | | SSgA Russell SC Value Index | | | 14,728 | units | ** | 1,573,650 |
| | | Transamerica AA - Moderate Growth | | | 575,703 | units | **17,856,612 | |
| | | Loomis Sayles Investment Grade Bond | | (2) | 57,004 | units | ** | 2,883,490 |
| | | Transamerica AA - Growth | | | 218,750 | units | ** | 7,211,196 |
| | | SSgA Russell LC Value Index | | | 30,336 | units | ** | 1,110,431 |
| | | Transamerica AA - Conservative | | | 190,770 | units | ** | 5,163,366 |
| | | Transamerica Partners High Yield Bond | | | 12,717 | units | ** | 627,790 |
| | | TA Vanguard Small- Cap Index | | | 1,647 | units | ** | 532,860 |
| | | TA Vanguard Small- Cap Grth Idx | | | 9,813 | units | ** | 731,206 |
| | | | | | | | 101,669,357 | |

Cash and money marketsCash and Bank Deposit Sweep Program9,837| investment contract: | | | | |
| --- | --- | --- | --- | --- |
| Transamerica | Transamerica Stable Value | 471,473units | ** | 9,735,927 |
| Other assets: | | | | |
| Transamerica | Expense budget account | | — | 2 |

Notes, with interest rate from 4.75% to *Participant Loans9.5%; maturities range through 2032—1,208,374 $118,307,524

Party-in-interest as defined by ERISA *Not applicable as these are participant directed.

(1)Effective October 14, 2020 investment option for Invesco American Value Ret Opt fund was replaced with this fund.
(2)Effective October 14, 2020 investment option for Loomis Sayles Bond Ret Opt fund was replaced with this fund.

See the accompanying report of independent registered public accounting firm.

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INDEX OF EXHIBITS

Exhibit No.Description of Document

23.1Consent of KPMG LLP

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SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN (Name of Plan)

Date: June 29, 2021 /s/ Maritza Arizmendi Maritza Arizmendi Executive Vice President and Chief Financial Officer

/s/ Juan J. Santiago Senior Vice President and Trust Officer

15